MATTHEW Newton's charge of assaulting a cab driver has been dismissed with a Sydney judge ruling he is "a mentally ill man."

As the troubled actor appeared in court via video link from New York City, he told Magistrate Graeme Henson that his new life off medication has left him "clearer, happier and nicer than I've ever been."

Under mental health legislation, Newton won't be convicted of assault provided he abides by a treatment plan for his mental health.

"I feel like a completely different person...like my eyes are open and I have a chance," Newton, dressed in a blue shirt and jacket, told the Downing Centre Local Court.

The court heard Newton was treated for close to 90 days at the Betty Ford Clinic, where he had 15 hour days to learn how to manage his condition.

Newton was accused of assaulting the driver on Sydney's North Shore on December 4 last year after arguing about the windows, radio station and lane choice.

His lawyer Chris Murphy told the court Newton had been suffering from a number of mental health conditions including post traumatic stress disorder, bipolar disorder and generalised anxiety.

In dismissing the charges of common assault under the section 32 mental health legislation, Magistrate Henson said he wanted to remind Newton to "adhere to the treatment regime."

The court heard Newton keeps a daily diary of his moods and that every day is focused "on being a good person and being healthy."

"I will do whatever is suggested to me [regarding treatment]," Newton told the court.

The 35-year-old says he has "no immediate plans" to return to Australia, but added "I have nieces and nephews..my family’s here."

Newton is the son of showbusiness couple Bert and Patti Newton.

The court had heard Newton relocated to the US to escape media and public attention in Australia.

While there, he was charged with resisting a police officer and trespassing at popular Miami watering hole, Mr Moe's Restaurant and Bar, on April 6.

Two weeks later he was charged with battery and resisting arrest without violence after he allegedly confronted a hotel clerk.